J Sainsbury Plc · LSE:SBRY
J Sainsbury — Sainsbury's Bank — Debt Investor Presentation (August 2022)
34 slides from J Sainsbury's debt investor presentation, August 2022
Slide 1: Sainsbury's Bank plc Tier 2 Investor Presentation August 2022
Sainsbury’s Bank plc Tier 2 Investor Presentation August 2022 RESTRICTED
Slide 2: Contents
Contents Business Overview 4 Strategy 11 Portfolio Overview & Performance 16 Financial Highlights 19 Capital, Funding and Liquidity 24 Transaction Overview 28 2 RESTRICTED
Slide 3: Credit highlights
Credit highlights Well established Bank with over 25 years trading history Major component of J Sainsbury ecosystem, benefiting from the strong and trusted Sainsbury’s brand Modern scalable banking platform Well-diversified business model with significant fee income Prudent risk stance evi
Slide 4: Business Overview
Business Overview RESTRICTED
Slide 5: J Sainsbury is a leading retail group with a strong ecosystem
J Sainsbury is a leading retail group with a strong ecosystem The largest open loyalty 2nd largest grocery store chain in the UK1 programme in the UK 3rd most visited ecommerce website in the UK 6th biggest clothing retailer in the UK by value and volume2 1 Nielsen 2 Kantar 5 RESTRICTED
Slide 6: Sainsbury's Bank has a clear and simple ownership structure
Sainsbury’s Bank has a clear and simple ownership structure … J Sainsbury plc Parent company Argos Limited Sainsbury’s Bank plc Retailer Transfer pricing agreement Home Retail Group Home Retail Group Insurance Services Ltd Card Services Ltd Prudential Regulatory Group Note: Only significant and rele
Slide 7: The financial services provider in the ecosystem
… and is the financial services provider in the ecosystem Ownership 100% owned subsidiary of J Sainsbury plc Of Sainsbury’s Group Strategy Customer 17.5mn Nectar customer base Around 80% Bank and insurance c. 4mn Active Financial Services customers have Nectar card customers For Sainsbury’s Franchis
Slide 8: A long history of supporting J Sainsbury Group customers
… with a long history of supporting J Sainsbury Group customers Our History Our Products ► JV with Bank of Scotland 1997 Sainsbury’s Bank Saving and lending ► In 2014, Sainsbury’s Bank fully acquired by J Sainsbury plc Savings ► Acquired Home Retail Group plc in 2016, adding Argos Loans Ownership /
Slide 9: We have exclusive access to J Sainsbury ecosystem
We have exclusive access to J Sainsbury ecosystem … 1.6m £4.2bn 21m Weekly Customer Weekly Transactions c. 4m deposits Transactions Customers 1,063 1,407 Stores and Supermarkets collection and stores points Significant digital participation 4.9 App store rating 17.5m 72% SB Credit Customers Broad-ba
Slide 10: … and its loyal customers
… and its loyal customers Customers love us 95% of Nectar points are redeemed on spend Brands NPS1 inside the group 82 56% of bank customers 55 shopped at Sainsbury’s in the last 3 months 52 28 30% of bank customers have been with the 19 Bank 5+ years 5 50% of AFS customers have been with AFS 4+ yea
Slide 11: Strategy
Strategy RESTRICTED
Slide 12: In September 2019, we set out a 5-year strategy to transform the bank
In September 2019, we set out a 5-year strategy to transform the bank … Vision To be the provider of Financial Services for Loyal Sainsbury’s Group customers Objective An agile, capital and cost efficient provider of simple, mobile-led financial services Priorities Reshape the balance sheet Simplify
Slide 13: Delivered through focussing on 3 key priorities
… which will be delivered through focussing on 3 key priorities Reshape the Balance Simplify the Strengthen the Sheet Organisation Business • Run off mortgage book1 • Right size the cost base • Focus on: - Operational resilience • Improve margins • Rationalise products - Conduct - Deposits - Capital
Slide 14: The business is delivering on the strategy
The business is delivering on the strategy … Reshape the Simplify the Strengthen Balance Sheet Organisation the Business Simplified Bank Board, Info sec and operational Mortgage portfolio in run resilience capabilities off, new panel insurance new ExCo team, strengthened enhanced model leadership En
Slide 15: Broadly on track to meet our market commitments
… and we are broadly on track to meet our market commitments 1 2 3 4 5 6 Stop putting Improve Financial Transform Reduce risk Focus on cash into returns services cash the cost base profile to Sainsbury’s Financial generative group customer services base No capital Double uPBT; Upstream Cost to Mortg
Slide 16: Portfolio Overview & Performance
Portfolio Overview & Performance RESTRICTED
Slide 17: A well-diversified business with strong fee income
We have a well-diversified business with strong fee income … Lending balances • Current lending products principally consist of unsecured £7.4bn personal loans, credit cards, Argos store cards and the Argos monthly payment plan (launched in March 2022) 894 £5.4bn £5.1bn • As part of Sainsbury's Bank
Slide 18: High-quality loan portfolio with appropriate provisioning
… and high-quality loan portfolio with appropriate provisioning Bad debt as a percentage of lending1 Provisioning Two-year average Sufficient provisioning in place to mitigate negative macroeconomic impacts ECL stock and ECL coverage by product line and IFRS stage 8.7% Total ECL provision* (£m) Tota
Slide 19: Financial Highlights
Financial Highlights RESTRICTED
Slide 20: Financial performance recovering towards pre-COVID levels
Our financial performance is recovering towards pre-COVID levels … Statutory consolidated Yo2Y Underlying profit before tax - basis FY19/20 FY20/21 FY21/22 Change Group contribution basis (£m) Total income 1 £429m £342m £359m (16)% 28 Underlying profit before tax £47m £(22)m £37m (21)% 27 14 Custome
Slide 21: Underlying profit recovering strongly despite lower customer assets
… with underlying profit recovering strongly despite lower customer assets 21 RESTRICTED
Slide 22: Consolidated income statement – Statutory basis
Consolidated income statement – Statutory basis Home Retail Sainsbury’s Bank Other Consolidation Consolidated FY21/22 (£m) Group Card plc1 subsidiaries1,2 adjustments3 Group Services Ltd1 Net interest income 173 106 1 (1) 279 Net fee income 68 5 1 0 74 Other operating income 6 0 0 0 6 Total income 2
Slide 23: Consolidated balance sheet – Statutory basis
Consolidated balance sheet – Statutory basis Home Retail Group Consolidation Consolidated FY21/22 (£m) Sainsbury’s Bank plc1 Other subsidiaries1,2 Card Services Ltd1 adjustments3 Group Cash, balances with central banks and other deposits 346 6 35 0 387 Loans and advances to banks 121 0 0 0 121 Deriv
Slide 24: Capital, Funding and Liquidity
Capital, Funding and Liquidity RESTRICTED
Slide 25: Strong capital, solid funding and ample liquidity
We have strong capital, solid funding and ample liquidity … Strong Capital Solid Funding Ample Liquidity c. 80% CET1 Stable and retail historically cost- deposit has been effective funded above 14% c. 90% of contingent retail funding2 deposit are High Post- sticky and quality dividend stable1 treasu
Slide 26: Consistently robust and prudent capital position
1 … with a consistently robust and prudent capital position … Total capital position Regulatory capital1 (£m, unless otherwise stated) FY19/20 FY20/21 FY21/22 20.2% CET1 822 791 685 18.1% 2.7% Tier 2 167 120 109 17.0% 2.5% Total capital resources 989 911 794 2.9% Total RWAs 5,816 4,503 4,392 CET1 ra
Slide 27: Diversified funding and liquidity profile
1 … supported by a diversified funding and liquidity profile Diversified sources of funding BOE facilities ILTR / TFSME Secured Repo market Regularly transacted in the markets with existing repo counterparties Capital markets Drury Lane securitisation programme Wholesale deposit Deposit platform and
Slide 28: Transaction Overview
Transaction Overview RESTRICTED
Slide 29: Transaction overview
Transaction overview Transaction Overview & Rationale Tender Offer Summary Terms • New GBP 10.5NC5.5 Tier 2 and concurrent cash tender • Cash tender for existing GBP175m Subordinated Notes due 23 November 2027, for existing 6% GBP175m Tier 2 with a reset date and optional redemption on 23 November 2
Slide 30: Disclaimer
Disclaimer RESTRICTED
Slide 31: Disclaimer
Disclaimer NOT FOR DISTRIBUTION TO ANY U.S. PERSON (AS DEFINED IN REGULATION S ("REGULATION S") UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT')) OR TO ANY PERSON OR ADDRESS IN THE UNITED STATES. THE PRESENTATION MATERIALS ARE NOT AN OFFER FOR SALE OF SECURITIES IN THE UNITED
Slide 32: Disclaimer
Disclaimer No person shall have any right of action (except in the case of fraud) against the Issuer, the Managers or any of their respective directors, officers or employees nor any other person in relation to the accuracy or completeness of the information contained herein or in any other document
Slide 33: Disclaimer
Disclaimer Investors are cautioned that forward-looking statements are not guarantees of future performance. Forward-looking statements may, and often do, differ materially from actual results. Any forward-looking statements in the presentation materials speak only as at the date of the presentation
Slide 34: Disclaimer
Disclaimer Within the European Economic Area ("EEA"), the presentation materials are only directed at professional clients or eligible counterparties and the Notes are not intended to be offered, sold or otherwise made available to and should not be offered, sold or otherwise made available to any r
Sainsbury's Bank — Debt Investor Presentation (August 2022) on 6ix